VINCENT C. MAISANO VS. LVNV FUNDING, LLC (L-2258-18, HUDSON COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1775-18T2
VINCENT C. MAISANO,
on behalf of himself and
those similarly situated,
Plaintiff-Appellant,
v.
LVNV FUNDING, LLC,
Defendant-Respondent.
____________________________
Argued November 14, 2019 – Decided November 27, 2019
Before Judges Haas and Mayer.
On appeal from the Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-2258-18.
Scott C. Borison (Legg Law Firm, LLP) of the District
of Columbia, Maryland, and California bars, admitted
pro hac vice, argued the cause for appellant (Kim Law
Firm LLC, and Scott C. Borison, attorneys; Yongmoon
Kim, Scott C. Borison, and Catherine Rhy, of counsel
and on the briefs).
Michael A. Iannucci argued the cause for respondent
(Blank Rome LLP, attorneys; Michael A. Iannucci, on
the brief).
PER CURIAM
Plaintiff Vincent C. Maisano appeals from a November 9, 2018 order
compelling arbitration and dismissing his complaint with prejudice. We affirm
the order compelling arbitration. However, we remand the matter to the trial
court to issue an amended order staying the case pending arbitration.
Plaintiff entered into a credit card agreement (Agreement) with Credit
One. The six-page Agreement included an "Important Notice" prominently
placed on the first page of the document, directing the cardholder to "read the
Arbitration Agreement portion of this document for important information about
your and our legal rights under this Agreement."
The Agreement's arbitration provision (Arbitration Agreement or
Arbitration Clause) contains a notice in bolded capital letters, explaining the
nature of arbitration and warning the cardholder that the Arbitration Agreement
"replaces the right to go to court, including the right to a jury and the right to
participate in a class action or similar proceeding" regarding "any controversy
or dispute." The Arbitration Agreement identifies the covered claims, including
disputes related to the "application, enforceability or interpretation of this
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Agreement," and "any claim for injunctive or declaratory relief." The
Arbitration Clause also prohibits the cardholder from participating in class
actions if one of the parties elects arbitration. Further, the Arbitration
Agreement "survive[s] . . . any transfer or assignment of [the] [a]ccount." The
cardholder accepts the terms of the Agreement by "requesting and receiving,
signing or using [the] Card."
Plaintiff used the credit card to make purchases. Plaintiff defaulted by
failing to tender the required credit card payment. Credit One subsequently
wrote off plaintiff's account in December 2012 with an unpaid balance of
$826.13.
Defendant LVNV Funding, LLC acquires unpaid credit card accounts and
pursues collection of those accounts. In January 2013, after plaintiff's debt was
deemed uncollectible, Credit One assigned "[a]ll rights, title and interest" in the
account to Sherman Originator III, LLC. The account was assigned from
Sherman Originator III, LLC to Sherman Originator, LLC, and then to
defendant.
Defendant filed an action in the Special Civil Part to recover the unpaid
credit card debt from plaintiff. The documents evidencing assignment of
plaintiff's account to defendant were annexed to the Special Civil Part
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complaint. As a result of that lawsuit, plaintiff made payments to satisfy the
outstanding debt.
In June 2018, plaintiff filed a putative class action for declaratory
judgment, injunctive relief, and damages against defendant. In lieu of filing an
answer, defendant filed a motion to dismiss and compel arbitration pursuant to
the Agreement. In support of its motion, defendant submitted the affidavits of
Adele Burton, Vice President of Credit One, and Amanda Hammond, a records
custodian employed by defendant's corporate affiliate.
After hearing the arguments of counsel, the motion judge explained she
was "obligated to compel arbitration" because she determined "there's a valid
agreement . . . and secondly, that the dispute falls within the scope of the
agreement." The judge noted the Agreement provided "any question[s]
regarding the enforceability or interpretation of the agreement are to be decided
by an arbitrator." In defining the covered claims under the Agreement, the judge
cited the following language from the document:
claims based on any theory of law, any contract; statute;
regulation; ordinance; tort, including fraud or
intentional tort; common law, constitutional provision;
respondeat superior; agency, or other doctrine
concerning liability for other persons, customs, course
of dealing, or any other legal entity or equitable ground,
including any claim for injunctive or declaratory relief
are covered.
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Based on the foregoing language, the judge explained the covered claims
included plaintiff's allegations against defendant under the Consumer Fraud Act
and the Consumer Financing Licensing Act.
The judge also determined the Agreement applied to Credit One and its
successors and assigns, including defendant, based on the language in the
document. The motion judge expressly found the Arbitration Agreement had
"different fonts, . . . different italicizing, . . . bold face [and] capitals[;] these
variations in the print are supposed to be visual cues . . . to take note . . . that
this is important." She did not find "the substance or content to be misleading
or unable to be understood or in any way equivocal." The judge concluded the
Arbitration Agreement was "valid, clear, and not in violation of . . . either of the
two statutes or the case law . . . ." Having determined the Arbitration Agreement
was valid, the judge granted defendant's motion to compel arbitration and
dismissed the matter with prejudice.
On appeal, plaintiff argues the motion judge erred by (1) deeming it was
for the arbitrator to decide whether the assignment of plaintiff's credit card debt
to defendant was void; (2) concluding the Arbitration Agreement did not violate
the plain language requirements; and (3) relying on inadmissible hearsay in
defendant's affidavits.
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"The existence of a valid and enforceable arbitration agreement poses a
question of law" requiring our de novo review. Barr v. Bishop Rosen & Co.,
Inc., 442 N.J. Super. 599, 605 (App. Div. 2015) (citing Hirsch v. Amper Fin.
Servs., LLC, 215 N.J. 174, 186 (2013)). We are "mindful of the strong
preference to enforce arbitration agreements." Hirsch, 215 N.J. at 186.
However, the preference for arbitration is not unbounded, and a trial court must
first determine if a valid arbitration agreement exists under state law. Id. at 187.
We first consider plaintiff's argument that the judge erred in deeming the
validity of the Agreement's assignment to defendant was arbitrable. Because
defendant was not licensed under the New Jersey Consumer Finance Licensing
Act (NJCFLA), N.J.S.A. 17:11C-3, at the time Credit One assigned the
Agreement, plaintiff claimed the Agreement was invalid and therefore the
Arbitration Clause was void.
The United States Supreme Court recently held "a court may not decide
an arbitrability question that the parties have delegated to an arbitrator." Henry
Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. ___, 139 S. Ct. 524, 530
(2019); see also Amalgamated Transit Union, Local 880 v. N.J. Transit Bus
Operations, Inc., 200 N.J. 105, 118 (2009) (holding "[a] court's duty is to refrain
from adjudicating the merits of a dispute that properly belongs to an arbitrator").
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The first question in a motion to compel arbitration is whether there was
an arbitration agreement. Henry Schein, Inc., 139 S. Ct. at 530 (citing 9 U.S.C.
§ 2). If that question is answered in the affirmative, threshold question s of
arbitrability must be referred to an arbitrator if the agreement so stipulates by
"clear and unmistakable" evidence. Ibid. (quoting First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 944 (1995)).
Because Henry Schein was decided after the motion judge rendered her
ruling, she made a threshold determination on arbitrability. Since the United
States Supreme Court issued its decision in Henry Schein, such a threshold
determination by a court is not required. Where specified disputes are properly
delegated, the disputes are within the exclusive determination of the arbitrator.
139 S. Ct. at 529. Here, the Arbitration Agreement clearly and expressly stated
claims relating to the "application, enforceability or interpretation of this
Agreement, including this arbitration provision" are subject to arbitration.
Therefore, the threshold issue of arbitrability is to be determined by the
arbitrator.
We next consider whether the Arbitration Agreement violated the New
Jersey Plain Language Act (NJPLA), N.J.S.A. 56:12-1 to 12-13, and rendered
the Agreement void. The NJPLA requires contractual clauses to be "written in
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a simple, clear, understandable and easily readable way as a whole." N.J.S.A.
56:12-2. Courts have held arbitration agreements valid under the NJPLA where
the agreements are "sufficiently clear, unambiguously worded, satisfactorily
distinguished from the other [a]greement terms, and drawn in suitably broad
language to provide a consumer with reasonable notice of the requirement to
arbitrate all possible claims arising under the contract." Curtis v. Cellco P'ship,
413 N.J. Super. 26, 33 (App. Div. 2010); see also Atalese v. U.S. Legal Servs.
Grp., L.P., 219 N.J. 430, 444-45 (2014) (discussing cases upholding arbitration
clauses). Waiver of rights language must clearly and unambiguously inform the
parties of the "distinction between resolving a dispute in arbitration and in a
judicial forum." Atalese, 219 N.J. at 445.
Here, the Agreement provides the cardholder with notice of the types of
claims subject to arbitration, and plainly outlines the difference between
arbitration and judicial proceedings. The Arbitration Agreement clearly
explains arbitration "replaces the right to go to court, including the right to a
jury and the right to participate in a class action" and expressly states, "[i]n
arbitration, a dispute is resolved by a neutral arbitrator instead of a judge or jury.
Arbitration procedures are simpler and more limited than rules applicable in
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court. In arbitration, you may choose to have a hearing and be represented by
counsel."
Having reviewed the record, particularly the language of the Arbitration
Agreement, we are satisfied the document clearly and explicitly articulated the
waiver of the right to proceed to court and unambiguously required the parties
to submit all disputes relating to the Agreement to arbitration.
We next consider plaintiff's contention that the affidavits in support of
defendant's motion were deficient because the affidavits included inadmissible
hearsay, lacked personal knowledge, and contained other evidentiary defects.
We review a trial court's evidentiary rulings for abuse of discretion. State v.
Kuropchak, 221 N.J. 368, 385-86 (2015).
We are satisfied the judge did not abuse her discretion in considering the
affidavits in support of defendant's motion. In her affidavit, Burton averred she
reviewed the Credit One records pertinent to the Agreement, and certified that
she was familiar with the "manner in which Credit One's credit account records
. . . are maintained . . . and the contents of the agreements." The Burton affidavit
was sufficient to support the judge's finding that the Agreement was made in the
regular course of Credit One's business, was an authentic business record, and
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therefore fell within an exception to the hearsay rule. See Hahnemann Univ.
Hosp. v. Dudnick, 292 N.J. Super. 11, 17-18 (App. Div. 1996).
Further, admission of the affidavits by the motion judge was proper
because the statements were based on personal knowledge. Evidence of
personal knowledge gleaned from business records need only be "sufficient to
support a finding that the witness has personal knowledge." N.J.R.E. 602, see
also New Century Fin. Servs., Inc. v. Oughla, 437 N.J. Super. 299, 326-27 (App.
Div. 2014) (affirming admission of foundation witness certifications based on
review of business records). Burton certified that she was a current employee
of Credit One and therefore had personal knowledge of the Agreement.
Hammond was the records custodian of defendant's corporate affiliate and
reviewed the regularly maintained business records regarding the Agreement .
Because we discern no abuse of discretion in the judge's admission of the
affidavits, we are satisfied that the remainder of plaintiff's arguments are without
sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
For these reasons, we affirm the order compelling arbitration of plaintiff's
claims. However, the judge improvidently dismissed plaintiff's complaint with
prejudice. See GMAC v. Pittella, 205 N.J. 572, 582 n.6 (2011) (citing N.J.S.A.
2A:23B-7(g)). The Uniform Arbitration Act provides for stays, rather than
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dismissals, of matters pending arbitration. Ibid. Therefore, we remand the
matter to the trial court to enter an amended order staying the action pending
arbitration.
Affirmed as to compelling arbitration. Remanded for the entry of an
amended order consistent with this opinion. We do not retain jurisdiction.
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